Heuristics for choosing Good VCs

As I was writing my post about VCs who use fear tactics on founders, I found myself making a list of qualities of good and bad VCs.

Since we just raised a round at AirGarage, I wanted to share some heuristics that might help you think about what to look for in a VC.

Good VC

• Invests regardless of confirmed lead or if firm XYZ is in

• Low partner to company ratio (pro-tip - ask how many companies they are working with / on the board of!)

• Passionately positive references from portfolio founders - some examples i've heard:

  • Drove to our office at 11pm from South Bay when we got shut down
  • Connected us to new customers!
  • Got me out of Chinese jail (not sure the story)
  • Got us the best lawyer when our co-founder's visa got stuck processing

• Previous founder experience

• Helps with hiring, fighting regulations, key introductions

Bad VC

• Waiting for lead investor to wire

• Anything but amazing  founder references

  • "Yeah...she's been pretty decent"
  • "Not the most experienced but he works hard"
  • "He's was involved a lot at the beginning but he's just super busy"
  • "I mean, she tries to help out but mainly just brainstorms with us"

• Makes promises to intro you to firms / customers after you let them invest

  • "We usually only make these types of intros to our portfolio companies, once you've signed the term sheet"

• Unresponsive when you first reach out, then wants in later once round gets hot

  • Pro-tip: use something like Docsend so you can see if its true when they claim "this deck got buried in my inbox"

• Sends swag and freebies - this is actually a psychological sales tactic where you are given free things and thus feel indebted. Similar to how time share sales work (free dinners)

• Promises extras - some extras can be nice, but don't pick a VC for the free office space.

• Subtweets founders on twitter, upset they didn't get in on deals